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KKR Turns Activist with Marvell Technologies Stake

Written by: Antoine Gara12/30/13 - 5:10 PM EST

Tickers in this article:
KKR MRVL

NEW YORK (TheStreet) - The private equity industry has capped off 2013 with a twist after KKR disclosed a 6.8% stake in Marvell Technologies and said it may engage with management on corporate actions such as a sale of the company, board changes or a dividend.

KKR's move, which appears more in the vein of an activist hedge fund, was disclosed on the same day that Blackstone Group, another PE-industry titan, said it would invest $200 million in a convertible preferred stock offering that will allow struggling footwear manufacturer Crocs to replace its CEO and buy back $350 million in stock.

Both moves indicate that the biggest private equity firms aren't just on the prowl for buyout investments as 2014 approaches.

KKR said in a filing with the Securities and Exchange Commission after the market close on Monday that it had accumulated a 6.8% stake in Marvell Technologies, which is currently embroiled in a patent lawsuit with Carnegie Mellon University that could cost the company over $1 billion. KKR, through its recently closed North America Fund XI, borrowed on margin to accumulate its stake in Marvell Technologies. The filing also states that KKR could seek to be an activist investor, calling for management change or corporate actions.

The buyout firm said in the Monday filing it "may engage in discussions with management, the board of directors, stockholders of the Issuer and other relevant parties or take other actions concerning any extraordinary corporate transaction (including but not limited to a merger, reorganization or liquidation) or the business, operations, assets, strategy, future plans, prospects, corporate structure, board composition, management, capitalization, dividend policy, charter, bylaws, corporate documents, agreements, de-listing or de-registration of Marvell Technologies"

Bloomberg Newsreported on the investment in November, however, the report made no mention of any possible corporate actions or board changes. To be seen is whether the private equity giant would want to own a larger chunk of Marvell Technologies, or even the entire company.

Some, such as hedge funder David Einhorn of Greenlight Capital Management have targeted the firm as a value investment in the technology sector. Greenlight is Marvell's second largest shareholder with a 9% stake in the company, according to SEC filings.